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Two lawyers who brought a class action against the city of Atlanta over its attorney occupational tax won a judge’s approval this week for fees but lost their effort to expand the class of lawyers due refunds. Fulton Superior Court Judge Rowland W. Barnes issued two orders in the case, effectively bringing the case to a conclusion — but he left the door open to certifying more class members. One order limits the number of lawyers whom the city must pay back; the other says the plaintiffs’ attorneys are entitled to one-third of the payout as fees. In granting the fees, Barnes scolded the city for its litigiousness. Barnes v. City of Atlanta, No. 2000-CV-24809 (Fult. Super. Sept. 16, 2003). The decisions are part victory and part setback for the attorneys who brought the case, former Georgia Court of Appeals Judge Irwin W. Stolz Jr. of Winburn, Lewis, Barrow & Stolz in Athens, Ga., and Robert D. Feagin of Decker, Hallman, Barber & Briggs in Atlanta. Feagin said he likes “most” of the order, but he’s concerned that people still will have to “jump through hoops to get a refund. I guess we’ll see the city of Atlanta back in court,” he said, referring to possible further efforts to expand the class. Feagin and Stolz had hoped Barnes would combine the larger Class I, or approximately 5,000 attorneys who had been certified for the constitutional issue, into the smaller Class II, or attorneys who had been certified for the refund. This would have given the refund to all Class I attorneys who paid the $400 annual lawyer occupational tax, which the Georgia Supreme Court declared unconstitutional in March. But Barnes limited the refund to the more than 500 lawyers certified in Class II. His decision means the plaintiffs’ lawyers’ potential fees have been reduced by about $6 million. If the plaintiffs’ attorneys had convinced Barnes to expand the class, the city would’ve owed $20.7 million in refunds and interest. Of that, Stolz and Feagin would’ve pocketed $6.9 million for approximately 800 hours of work. City Attorney Linda K. DiSantis estimates the city will owe no more than $2 million in fee refunds, including interest. That would mean that the plaintiffs’ lawyers could earn up to $660,000. The city is still sorting out the attorneys who are certified for a refund, she said, calling Barnes’ decision a “terrific outcome” for the city. DiSantis said Barnes “ruled in our favor on everything except the fee/tax issue and the one-year statute of limitations.” Barnes rejected the city’s argument that the tax was really a fee. Just because the tax was deemed unconstitutional, he wrote, the city couldn’t argue it was a “fee” to lower the statute of limitations. Barnes ruled that a three-year, as opposed to a one-year, statute of limitations applies. Calling the class refund issue a question of first impression, Barnes said he consulted state and federal authorities, and after doing so, rejected the plaintiffs’ argument. The plaintiffs’ “attorneys have essentially attempted to change the scope of their representation of the members of Class One,” Barnes wrote. “Such an amendment is possible, but not after the merits of the case have been determined. … To attempt to do so at the hearing on final judgment is too late.” Barnes also ruled on several other issues. He determined that Class II plaintiffs were due a refund dating back three years from the date of the refund request. He set the interest rate on the refund at 7 percent per year from the date of demand. The plaintiffs had asked for 12 percent interest. Barnes gave the city two months to pay the full refund to Stolz and Feagin for distribution. DiSantis said the city is working to meet that deadline. The two orders bring to a partial close the 3-year-old case that went as high as the Georgia Supreme Court and changed state law. Prior to this case, cities couldn’t be slapped with class action cases over tax or fee issues. What the plaintiffs’ attorneys did, Barnes wrote, “was to make new law and overrule a line of cases barring class action refunds in tax cases. This long-standing rule, set forth in Henderson v. Carter, 195 SE2d4 (1972), had been a hindrance to tax practitioners throughout the state. Such a result required skill beyond that required in a typical case.” Three intervenors had argued at the July 9 hearing on fees against granting Stolz and Feagin 33.33 percent of the refunds, calling the amount excessive. But Barnes disagreed, stating that Stolz’s and Feagin’s expertise and tenacity in the face of the city of Atlanta’s litigiousness earned them the fees. “[T]he City of Atlanta fought the case as hard as possible, despite clear law on point governing the issue. The plaintiffs’ attorneys were forced to go far beyond what would have been necessary with other opponents. The city appealed the case to the Supreme Court where, in a near-unanimous decision, the court affirmed this court’s ruling on summary judgment,” Barnes explained.

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